A PEOPLES BANK.

Saturday, 24 July 2010 15:10 | Written by Brian Lor. | | |

A Zero fee, Low Interest 'Peoples Bank'.

The public has never had such a low opinion of the morals of the Banking sector as it does today!People are incensed by the high fees and the extreme profits. They are livid when charged $40 for exceeding a line in the sand by a few dollars. Or charged a few dollars for a balance check that costs less than a cent of computer time.

We will start A Peoples Bank. A Zero fee, Low Interest mortgage and Business loan provider.After the Great Depression, Australia and America both started a Low Fee, low interest 'Peoples Bank'. (The Australian Commonwealth Bank and the USA's FNMA (Fannie Mae)) These banks worked spectacularly well, assisting to re-build the two Nations.Sadly, those two very profitable public assets (belonging to our children) were sold off for the equivalent of just a few years profit.That same banking model will help us re-build our economies again today.

Several nations are on the brink of opening a "National Peoples Bank"The taxpayers of those nations are outraged that the Bank Bailouts have so indebted their economy that their Governments are now having to cut public services and increase taxes.The taxpayers of these countries have already paid enough to literally buy their own bank and, faced with the prospect of having to pay out more, the obvious choice will be to cut their losses (nationalize) and create a "Peoples Bank". (Irish taxpayers already own all the big banks of Ireland - USA taxpayers now own the FNMA & FHLMC (Fannie and Freddie))

This bank will be a Zero fee, Low Interest Mortgage, Personal and Business loan provider..It will also provide a Credit Card service at about half the interest rate charged by the competition. [read more]It will be fully government guaranteed and will NOT be an investment bank and will not trade in derivatives or swaps and thus will be a totally safe haven for 'cash investors' who want a return higher than normal savings banks.

It will provide higher than normal returns because it will work on half the margin of private banks. Normally, if a bank pays its investors 5%, it will charge borrowers 10%.. As a 'not for profit' entity, our bank would be able to pay 6% instead of 5% and charge 8% instead of 10% - and still have massive funds for expansion and for staffing regional branches.With this level of safety and high returns, our bank will attract an incredible amount of capital and will soon rival the big banks. It will become an International chain of sister banks.(Worldwide, there are trillions of dollars languishing in low interest Cash Accounts, waiting for a Safe reasonable return investment like this bank!)

Even though this Bank will be government owned, it will NOT be run by politicians or their friends. It will be managed by the best banking talent money can buy. (Under our POEM model.)(POEM stands for Public Owned, Expert Managed. It is a similar model to that of the Army, NASA or Police - These entities are Public Owned but Managed by world-class, highly paid experts.)

Banks are holding back on lending to small business..

Many local banks may seem in good shape now, but they rely on the major international banks for funding - and the international banks are in trouble..Banks are not holding back on lending because of greed or belligerence, they are fearful of what might be coming next. The collapse of Lehman Brothers illustrated the terrifying reality that no one knows how deep the 'rabbit hole' of debt goes, or how entangled it might be. And, we won't know for years because thousands of major financial entities will not reveal their level of exposure while there is a glimmer of hope that the global economy might soon rebound.

The major banks are suffering a fear induced paralysis.. There are several 'tsunamis' of Defaults building on the horizon.• Sovereign Nations like Ireland, Iceland and Greece have accumulated debts that will take many generations to pay back. Few of the creditor banks expect they will ever see that money again.• As world unemployment rises, there are massive waves of home mortgage defaults battering the international banks.• Judges in the US are allowing many home owners to walk away from mortgages that now exceed the reduced value of the house. Even cashed-up owners are being allowed to hand back the keys to the bank without criminal charges or a bankruptcy. These "Strategic defaults" are a real threat to the major international banks.• Business failures and associated bankruptcies are on an alarming rise.• There is possibly a trillion dollars of new commercial property development that will not be occupied within the foreseeable future. All funded by the international banks.It is little wonder that these banks are trying to build up their reserves rather than lending to businesses.If we want a bank that we can rely on to provide low interest business and mortgage loans within this decade, we will have to open and fund our own 'Peoples Bank'.

The Banking Sector wasn't just the victim of unforeseen circumstances..This isn't the first time that bad banking practices have collapsed the financial world and destroyed the investments of millions of taxpayers. This has happened to EVERY GENERATION since the crash of 1796, (when a Land speculation bubble burst. - sound familiar?)The famous 'Crash' years are.. 1796, 1819, 1837, 1857, 1873, 1882, 1901, 1929 (The Great Depression), 1938, 1973, 1987, 2000 (the Dot Com) and 2007. (About every 20 years!) It was a farce for politicians to publicly say "Who could have foreseen this coming? For the last ten years, many Senators have been warning us that another crash was coming.

Banks seem to be a law unto themselves.. A bank providing a service, can charge a customer a 1000 times the cost of that service. If a car repair shop did that, they would be shut down.There is worldwide public anger at the behavior of the large banks. In response, every national leader is expressing a fierce resolve to severely limit the worst of their 'bad practices' namely, those lucrative but dangerous derivative schemes. There is no doubt that those schemes will be severely restricted but, the problem for home owners is that mortgage rates will have to rise dramatically because the mortgage business was heavily subsidized by derivative trading.Big Banking used to be a 'cash cow' for major investors.. That time has passed and big investors will be walking away from the banking industry - leaving our local banks in a more precarious position.

High Risk Financial Gambling..

Most forms of financial Investment carry an associated risk. Usually, the higher the projected return, the higher the risk. Many of our Nations leaders are lamenting that most of the worlds best investment minds are not investing in anything tangible like production of goods or developing new markets. Instead they are investing in Pyramid schemes and Speculation Bubbles. They are gambling on making obscene amounts of money quickly and getting out of the scheme at the last minute - before it pops. They are essentially playing 'Chicken' with other peoples money.